We all have a mental map of the world, and when it comes to economic might, that map has remained fairly unchanged: with a couple of notable exceptions, the South is poor and the North generally fairly wealthy.

However, we may have noticed recently that this map is getting a little out of date; everybody is aware of China's rise, and we have realized that Mexico and Brazil aren't doing so badly either.

But few people living in the traditionally rich North have fully taken in how dramatically the world is changing and how unrecognizable our global map soon will be: in 2000, 75 countries were listed as 'low-income' by the World Bank. This year, 36 countries remain on the list, and by 2020 it may have dwindled to fewer than 20.

Mexico, Brazil, and Turkey, to mention a few, will have become high-income countries by 2020, while some European countries will have slipped into -- or stubbornly remain in -- the middle-income bracket. Some of the new middle-income countries are predictable: Vietnam and Kenya, for example. Some, however, are surprises; Angola, Pakistan, Cambodia?

It is time to rearrange our mental categories and show these newcomers some respect. For many of them, the growth is the result of several decades of prudent government policies and hard work by their people. Their newfound wealth is well deserved.

For some, however, valuation of natural resources and in some cases, the vagaries of currency exchange rates, have driven 'paper wealth' just high enough to flip them into the 'middle-income' category.

Why do these categories matter? Because a lot of development aid hinges on them. The generosity of many donor countries, international funds and development banks, together with the most favourable lending conditions, are reserved for those poorest countries. Growing a few dollars richer per capita can cost a country dearly in the loss of foreign assistance and cheap loans.

This wouldn't be so much of a problem if the people in these countries were also growing wealthier. Sadly, for most part, they are not. With some notable exceptions, wealth, when it has occurred, has ended up in very few pockets. Whether through deliberate policies to reward the rich, or through weak fiscal and re-distributive capacities, large majorities of the population in these no-longer-so-poor countries have seen far too little of the new wealth, while having to watch a dramatic rise in conspicuous consumption by a small elite.

South Africa, for example, has a more unequal income distribution now than when apartheid ended, 18 years ago. In Brazil, the top 10 per cent of the population earn 43 per cent of all income, while the bottom fifth earn less than 3 per cent. In Mozambique, a country which -- thanks to newfound gas reserves -- will move into the middle-income bracket, the top 10 per cent earn 37 per cent of all income, while the bottom fifth earn just over 5 per cent. As the gas and mineral wealth increases, so does inequality, unless Mozambique's government manages to put in place dramatic re-distribution policies over the coming few years.

This growing inequality coincides with rapid urbanization. In exchange for a marginally better income, new migrant populations pay a high price for moving to the city in the form of pollution, stress and exploding rates of lifestyle-related diseases such as diabetes, heart disease and cancer. Infectious diseases such as dengue, cholera and tuberculosis thrive in urban slums.

Take a a Filipino fisherman. He may earn a few more pesos each day working as a hawker in Manila's slums, but he can no longer afford to buy fish from the market for his family and would instead have to rely on cheap, processed food, high in sugar and fat.

Paradoxically, in our supposedly globalized world, the fight against poverty is increasingly changing from a global struggle to a series of national battles, with hundreds of millions of people trapped in poverty inside the borders of countries not poor enough to qualify for development aid.

Fearing the social instability caused by this gap between rich and poor, some countries such as India, Brazil and to some extent China are increasing domestic investments in health, education and some social services.

But in many others, millions of poor are now held hostage to governments that don't prioritize such 'soft investments'. Those likely to be at the back of every queue, such as poor women, their children, slum dwellers, homosexuals, sex workers and drug users, are losing whatever help international aid workers could provide in the past. These aid workers were often the only friends they had.

Several things can be done to prevent making our world's dangerous gap between rich and poor even worse. Donor countries, global health funds and development banks must become 'smarter' in how they allocate aid. This could involve earmarking funds for the most vulnerable in middle-income countries and providing aid to 'sub-national' entities, such as poor provinces and regions in these countries. Donors should also support civil society groups that can act as watchdogs and advocates for better social policies. NGOs should help train and support these national groups.

A report from the Kofi Annan-chaired Africa Progress Panel provides a number of recommendations for African leaders facing rapid development of oil, gas and mineral resources which are as valid for any rapidly growing country: don't undervalue your national resource wealth; tax extractive industries properly; invest in social, physical and telecommunications infrastructure; and encourage secondary industries that add value.

Finally, international diplomacy should begin to assert pressure on countries to provide basic services for its citizens, similar to today's pressures to respect human rights. A group of foreign ministers from Brazil, France, Indonesia, Norway, Senegal, South Africa and Thailand are already advocating opening up such a new diplomatic front.

Development assistance was originally designed to help all people in our world have a decent chance for a healthy, productive life. Increasingly, it has also become a tool to prevent social unrest and mass migration caused by appalling inequality. In our increasingly complex world, managing such challenges is becoming harder, and we need to become smarter in the way we deal with them.

Jon Liden is a Consultant Research Fellow at the Chatham House Centre on Global Health Security